On the Disadvantages of Switching to the Federal Exchange

MNsure, Minnesota’s state-based health exchange, has been a target of conservatives since its founding in 2013, including several attempts to transition to a federally-administered exchange. This raises the question of whether or not a federal exchange is in any way better than the current system.

MNsure is the marketplace for individual and small group plans, and public health insurance in Minnesota, and insurance providers determine the products sold on the website, meaning that MNsure is simply a platform for Minnesotans to enroll in private and public insurance, with a built-in calculator that determines if enrollees are eligible for Medical Assistance, MinnesotaCare, or a Qualified Health Plan, as well as eligibility for premium tax credits.

In 2016, MNsure had its best open enrollment period to date, signing up a record 117,654 private enrollees, and faced no major technical problems (aside from a malicious attempt to jam the phone lines). Minnesota has been a leader in insurance coverage since the establishment of MNsure, with uninsurance rates down to 4.3% in 2015. Quality improvement and tech plans for the 2017 open enrollment period were on schedule, as of MNSure’s April 2017 board meeting. Insurance premiums did rise dramatically in 2017, but there is an important distinction to make regarding MNsure’s role in those rate hikes: they have none. Insurance companies set premium rates and choose what plans to sell, while MNsure provides the platform for the marketplace and helps determine eligibility for tax credits. The switch would not change the prices of health insurance. However, many other health care options rely on MNsure and the funding it provides, and they would be adversely affected by a switch to a federal exchange.

The most obvious effect of a switch would be changing the administration of the exchange from the state of Minnesota to the federal government. The insurance plans and out-of-pocket costs would remain the same, as MNsure has no control over plan costs. However, customer service via the website maintenance and phone and chat services would change, and it is unclear if current spending levels would stay the same or if they would drop. The Consumer Assistance Program in Minnesota, which will administer $4 million in navigator and outreach grants in the year ending June 30th, 2017, would shift from MNsure to the US Department of Health and Human Services. This doesn’t necessarily mean that those grants would stop, but the fate of these grants is an open question.

Additionally, MinnesotaCare, which currently insures 90,000 low-income Minnesotans in a basic health plan, would not be available on the HealthCare.gov website. According to a January 2016 report by the Minnesota Health Care Financing Task Force, a federal exchange cannot accommodate a website that includes eligibility determination for state programs, which includes MinnesotaCare. Minnesota could potentially continue enrollment on its own, but that would take an additional investment in technical support and outreach efforts to aid enrollment. There are suggestions that counties could take on this cost burden, but none have the administrative capacity to build a new website for enrollment, provide 24-hour tech support for enrollees, or raise the funds. This change would also force those 90,000 Minnesotans to enroll in the federal exchange, which would cost them more in premium costs as well. For instance, a 50-year old couple that makes 200% of poverty (roughly $32,000) would pay $160 per month on MinnesotaCare. That same couple would pay $172 per month for a Silver plan on the exchange if they use premium tax credits, raising their costs by 7.5 percent.

When paired with new Centers for Medicare and Medicaid Services (CMS) rules, the effects of switching to the federal exchange would severely cut enrollment numbers, and likely make younger people less likely to buy health insurance. For instance, the new rule that shortens the open enrollment to six weeks (from three months) would shorten the amount of time that people could seek assistance in enrolling and determining eligibility for premium assistance or Medicaid. Since there would be fewer navigators and brokers to begin with in Minnesota, enrollment could drop dramatically. Conversely, MNSure retains the authority to run a longer open enrollment period, and did so in January.

Navigators and brokers have finite numbers of slots to serve people, and by cutting the enrollment period in half, thousands of people could lose their opportunity to receive in-person assistance when deciding on health insurance. In the first seven months of the Consumer Assistance Program, navigators and brokers in all 87 of Minnesota’s counties screened 86,000 people, and 26,000 enrolled in Medical Assistance, MinnesotaCare, or Qualified Health Plans.

Other changes, like requiring income verification rule for every enrollee during special enrollment periods, will slow down the enrollment process, and possibly deter people with irregular annual incomes from applying for health insurance. A CMS study of income verification methods demonstrates that this has already happened. The study found that only 55% of younger applicants (aged 18-24) followed through with submitting their income verification, while 55 to 64 year-olds complied 73% of the time. If this trend continues, the marketplace will lose thousands of dollars in premiums that subsidize the care for older, sicker Minnesotans, as well as increase the uninsurance rate. If the existing contracts for brokers and navigators (negotiated through MNsure) aren’t carried over by the federal government, it could be incredibly difficult for people in Greater Minnesota to discuss their insurance options with someone and get help buying a plan.

More states are now considering starting a state-run exchange to help control their own plans for health care, so now is not the time to revert to a federal exchange and create more uncertainty for Minnesotans. States that have historically put serious effort into implementing the Affordable Care Act are the ones with the lowest uninsurance rates, Minnesota being one of the best examples. We should continue our work to improve MNsure and make quality health care affordable for all Minnesotans, not switch over to a federally-run exchange where there will be less available help and access for Minnesotans seeking health insurance.

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